Florida Senate - 2017                                    SB 1684
       
       
        
       By Senator Farmer
       
       
       
       
       
       34-01474-17                                           20171684__
    1                        A bill to be entitled                      
    2         An act relating to insurance rates; amending s.
    3         627.062, F.S.; providing that certain attorney fees,
    4         costs, and expenses may not be considered expenses by
    5         the Office of Insurance Regulation when the office is
    6         determining whether a rate is excessive, inadequate,
    7         or unfairly discriminatory; providing that certain
    8         attorney fees, costs, and expenses may not be included
    9         in an insurer’s rate base and may not be used to
   10         justify a rate or rate change; amending s. 627.0651,
   11         F.S.; providing that certain attorney fees, costs, and
   12         expenses may not be included in a motor vehicle
   13         insurer’s rate base and may not be used to justify a
   14         rate or rate change; amending s. 627.072, F.S.;
   15         providing that as to workers’ compensation and
   16         employer’s liability insurance, certain attorney fees,
   17         costs, and expenses may not be included in an
   18         insurer’s rate base and may not be used to justify a
   19         rate or rate change; amending s. 627.410, F.S.;
   20         providing that certain attorney fees, costs, and
   21         expenses may not be included in an insurer’s rate base
   22         and may not be used to justify a rate or rate change;
   23         amending s. 627.428, F.S.; providing that certain
   24         attorney fees, costs, and expenses may not be included
   25         in an insurer’s rate base and may not be used to
   26         justify a rate or rate change; amending s. 627.640,
   27         F.S.; providing that certain attorney fees, costs, and
   28         expenses may not be included in an insurer’s rate;
   29         providing an effective date.
   30          
   31  Be It Enacted by the Legislature of the State of Florida:
   32  
   33         Section 1. Paragraph (b) of subsection (2) of section
   34  627.062, Florida Statutes, is amended, and subsection (11) is
   35  added to that section, to read:
   36         627.062 Rate standards.—
   37         (2) As to all such classes of insurance:
   38         (b) Upon receiving a rate filing, the office shall review
   39  the filing to determine if a rate is excessive, inadequate, or
   40  unfairly discriminatory. In making that determination, the
   41  office shall, in accordance with generally accepted and
   42  reasonable actuarial techniques, consider the following factors:
   43         1. Past and prospective loss experience within and without
   44  this state.
   45         2. Past and prospective expenses. Attorney fees, costs, and
   46  expenses associated with any adversarial proceeding against an
   47  insured or named beneficiary may not be considered as expenses.
   48         3. The degree of competition among insurers for the risk
   49  insured.
   50         4. Investment income reasonably expected by the insurer,
   51  consistent with the insurer’s investment practices, from
   52  investable premiums anticipated in the filing, plus any other
   53  expected income from currently invested assets representing the
   54  amount expected on unearned premium reserves and loss reserves.
   55  The commission may adopt rules using reasonable techniques of
   56  actuarial science and economics to specify the manner in which
   57  insurers calculate investment income attributable to classes of
   58  insurance written in this state and the manner in which
   59  investment income is used to calculate insurance rates. Such
   60  manner must contemplate allowances for an underwriting profit
   61  factor and full consideration of investment income that produces
   62  a reasonable rate of return; however, investment income from
   63  invested surplus may not be considered.
   64         5. The reasonableness of the judgment reflected in the
   65  filing.
   66         6. Dividends, savings, or unabsorbed premium deposits
   67  allowed or returned to policyholders, members, or subscribers in
   68  this state.
   69         7. The adequacy of loss reserves.
   70         8. The cost of reinsurance. The office may not disapprove a
   71  rate as excessive solely due to the insurer having obtained
   72  catastrophic reinsurance to cover the insurer’s estimated 250
   73  year probable maximum loss or any lower level of loss.
   74         9. Trend factors, including trends in actual losses per
   75  insured unit for the insurer making the filing.
   76         10. Conflagration and catastrophe hazards, if applicable.
   77         11. Projected hurricane losses, if applicable, which must
   78  be estimated using a model or method found to be acceptable or
   79  reliable by the Florida Commission on Hurricane Loss Projection
   80  Methodology, and as further provided in s. 627.0628.
   81         12. Projected flood losses for personal residential
   82  property insurance, if applicable, which may be estimated using
   83  a model or method, or a straight average of model results or
   84  output ranges, independently found to be acceptable or reliable
   85  by the Florida Commission on Hurricane Loss Projection
   86  Methodology and as further provided in s. 627.0628.
   87         13. A reasonable margin for underwriting profit and
   88  contingencies.
   89         14. The cost of medical services, if applicable.
   90         15. Other relevant factors that affect the frequency or
   91  severity of claims or expenses.
   92  
   93  The provisions of this subsection do not apply to workers’
   94  compensation, employer’s liability insurance, and motor vehicle
   95  insurance.
   96         (11) Attorney fees, costs, and expenses associated with any
   97  adversarial proceeding against an insured or named beneficiary
   98  may not be included in the insurer’s rate base and may not be
   99  used to justify a rate or rate change.
  100         Section 2. Subsection (15) is added to section 627.0651,
  101  Florida Statutes, to read:
  102         627.0651 Making and use of rates for motor vehicle
  103  insurance.—
  104         (15) Attorney fees, costs, and expenses associated with any
  105  adversarial proceeding against an insured or named beneficiary
  106  may not be included in the insurer’s rate base and may not be
  107  used to justify a rate or rate change.
  108         Section 3. Subsection (6) is added to section 627.072,
  109  Florida Statutes, to read:
  110         627.072 Making and use of rates.—
  111         (6) Attorney fees, costs, and expenses associated with any
  112  adversarial proceeding against a claimant may not be included in
  113  an insurer’s rate base and may not be used to justify a rate or
  114  rate change.
  115         Section 4. Subsection (9) is added to section 627.410,
  116  Florida Statutes, to read:
  117         627.410 Filing, approval of forms.—
  118         (9) Attorney fees, costs, and expenses associated with any
  119  adversarial proceeding against an insured or named beneficiary
  120  may not be used to justify a rate or rate change.
  121         Section 5. Section 627.428, Florida Statutes, is amended to
  122  read:
  123         627.428 Attorney Attorney’s fee.—
  124         (1) Upon the rendition of a judgment or decree by any of
  125  the courts of this state against an insurer and in favor of any
  126  named or omnibus insured or the named beneficiary under a policy
  127  or contract executed by the insurer, the trial court or, in the
  128  event of an appeal in which the insured or beneficiary prevails,
  129  the appellate court shall adjudge or decree against the insurer
  130  and in favor of the insured or beneficiary a reasonable sum as
  131  fees or compensation for the insured’s or beneficiary’s attorney
  132  prosecuting the suit in which the recovery is had.
  133         (2) As to suits based on claims arising under life
  134  insurance policies or annuity contracts, no such attorney fees
  135  attorney’s fee shall be allowed if such suit was commenced prior
  136  to expiration of 60 days after proof of the claim was duly filed
  137  with the insurer.
  138         (3) When so awarded, compensation or fees of the attorney
  139  shall be included in the judgment or decree rendered in the
  140  case.
  141         (4) Attorney fees paid pursuant to this section may not be
  142  included in the insurer’s rate base and may not be used to
  143  justify a rate or rate change.
  144         (5) Attorney fees paid by an insurer to its attorneys for
  145  prosecuting or defending an action that could cause attorney
  146  fees to be awarded pursuant to this section may not be included
  147  in the insurer’s rate base and may not be used to justify a rate
  148  or rate change.
  149         Section 6. Section 627.640, Florida Statutes, is amended to
  150  read:
  151         627.640 Filing of classifications and rates.—
  152         (1) An insurer shall not deliver or issue for delivery in
  153  this state any health insurance policy until it has filed with
  154  the office a copy of any applicable classification of risks and
  155  premium rates.
  156         (2) Attorney fees, costs, and expenses associated with any
  157  adversarial proceeding against an insured or named beneficiary
  158  may not be included in the insurer’s rate.
  159         Section 7. This act shall take effect July 1, 2017.